Financial planning and money saving starts only after identifying and differentiating between essentials or basic life necessities and the desirable “must haves.” Basic necessities never really change — food, water, shelter, and clothing. However, modern life has created a host of “new necessities” that many people swear are vital — a daily latte from Starbucks, cable TV, weekly manicures, a new leased automobile, and the latest cell phone.
To significantly cut expenses and save money, it is important to evaluate your needs. In today’s world, where the cost of living is high, cutting down on luxuries can be a form of money saving; but is that enough? Commodities that you consider necessities can be luxuries for others.
To save on life necessities, identify necessities and understand the difference between essential and nonessential spending. Mortgage or rental payment is an essential expense, but the cable bill is nonessential. Make a list of monthly expenses and label each expense as essential or nonessential.
Prioritize nonessential expenses according to their importance and then cut down on the least important ones. If you have an infrequently used gym membership, cancel it. If you rarely watch TV, switch to a cheaper basic plan.
The next step is to look for cheaper alternatives for the remaining nonessentials. For instance, retain a single phone line instead of having a mobile phone and a land line. These are quick, effective ways to save money.
Negotiate. Phone, cable, and internet plans are good examples. Call competitors of your current service provider to find cheaper alternatives for similar packages. Even check if your own provider offers cheaper rates for new customers. With this information, you can negotiate a lower price even from your current provider.
Your grocery budget is a good area to evaluate. Stop eating out frequently. Instead of buying branded packaged food items, try generic brands. If you have the time, coupons and checking weekly grocery deals can help you buy food items on sale and at reduced prices.
Shop smarter. Buy clothing or other necessities in bulk or when they are on sale. Check out thrift stores and yard sales in your area.
Finally, cut down on extraneous expenses. It is possible to live without cable TV. If you cannot afford your car payment, consider selling it to buy a cheaper second-hand car.
Money saving accrued by tiny lifestyle adjustments now can help to prevent years spent working off debt added up by following the latest trends.
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